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Finance & Accounting
Pages 8 (2008 words)
AUDIT REPORT FOR LITTLE DIGGERS Ltd I) The key audit risks to the audit for Little Diggers Ltd It is noted that all audit work entail some risk; this may be because of a set of company accounts having been misstated due to a mistake or fraud, or when an auditor unsuccessfully detects errors or fraud in accounts. Audit risk is the risk that the auditors may unintentionally fail to adjust their analysis on financial accounts that are greatly misstated. The following are the risks that Little Diggers Ltd is subject to.
The auditor should consider whether to acknowledge the commitment since inherent risk increases the generally risk of the audit. It is often beneficial to set aside transactions into three types- routine, non-routine, and evaluation when valuing inherent risk. Little Digger’s auditors may not use the system that gives the precise outcome to them, the result is mainly inherited by the risk factors as this system is applied to just a small section of the population as opposed to the whole population. This is prone to the misstatement that is said to be the inherent risk. The term inherent risk is applied in auditing and accounting, if there is higher likelihood of material misstatement within the financial statement, the inherent risk is considered high .It is also used for the misstatement of the business that is there in the financial statement. If the auditors will not lookout at these inherent perils, there would be more inaccuracies in the financial statement, which certainly will lead the organization to the incorrect direction, and consequently the financial statement will not be presenting accurate and just outlook. ...
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